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Canadian housing starts rebound strongly in November but details not as encouraging After experiencing an surprisingly sharp 9.3% drop to 167,800 annualized units (initially reported as 167,900) in October, representing the slowest pace in new home construction in more than a year, Canadian housing starts bounced back in November, rising 11.6% to a three-month high annualized pace of 187,200. A rebound in starts had been expected because the level of building permits have remained around 200,000, although market expectations were for a much smaller 3.0% rise in the level of starts to 173,000 annualized units. The strength in total housing starts was mainly the result of the 20.9% surge in the typically volatile urban-multiples component, which more than unwound October’s 14.9% drop. The generally stable single-urban starts component rose a solid 5.5% from the previous month, while starts in rural areas provided some offset with an estimated 5.5% decline. Ontario was the sole source of strength with total starts up a whopping 82.8% in the province thanks to a 137.2% increase in multiple-unit construction (single-unit construction also surged 23.9%). Significant weakness was seen elsewhere, because steep drops in multiples and modest declines in singles drove overall declines in Atlantic Canada (-24.0%), British Columbia (-21.3%) and Quebec (-15.2%). The Prairies saw a more moderate 1.5% decline because a small gain in multiples provided a partial offset to the drop in single-unit starts. On the surface, today’s reported surge in housing starts in November appears to provide evidence of an improvement in the residential real estate market; however, without the unsustainable strength recorded in Ontario, the report suggests that construction activity remains under considerable pressure in the fourth quarter of 2010. We expect that residential investment will ease in 2011 as the housing supply adjusts to cooling demand before stabilizing at levels that are closer to long-term averages. David Onyett-Jeffries, Economist, RBC Economics

To view the economic data calendars with trend charts, go to: (Canada) (United States) The statements and statistics contained herein have been prepared by the RBC Economics Research based on information from sources considered to be reliable. We make no representation or warranty, express or implied, as to its accuracy or completeness. This report is for the information of investors and business persons and does not constitute an offer to sell or a solicitation to buy securities

RBC Economic Update - Housing Starts Rebound